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Retirees Underestimate Life Expectancy, Risk Underfunding Retirement

August 25, 2012

Retirees Underestimate Life Expectancy, Risk Underfunding Retirement
Source: Society of Actuaries

With life expectancy rates on the rise, more than half of retirees and pre-retirees underestimate the age to which a person of his or her age and gender can expect to live, which can have significant implications on retirement planning, according to a new report from the Society of Actuaries (SOA).

This SOA highlights report released today illustrates findings on longevity from the “2011 Risks and Process of Retirement Survey Report,” such as approximately four in 10 underestimate their life expectancy by five or more years.

“Underestimation of life expectancy, combined with having too short of a planning horizon can result in inadequate funds for retirement needs,” said actuary and retirement expert Cindy Levering, ASA, MAAA, EA. “There is a general misunderstanding of what ‘average life expectancy’ means, and when people are told they will live to an age such as 80 or 85, they don’t realize that this means there is a 50 percent chance that they could live past that age.”

Hat tip: PW

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Categories: business and economics, health and health care, retirement, Society of Actuaries
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